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tv   Milken Health Summit with World Bank President  CSPAN  November 22, 2017 12:22pm-12:56pm EST

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[ applause ] and one of the things we constantly, and our president started out with this issue. you think you might be trying to solve a problem here, but it results in something else. so the extension of life, the improvement of quality of life, technology today, has made a lot of challenges, as young adults grow up and the challenges. and we appreciate the path you have taken, and we appreciate the history lesson tonight. thank you very much. [ applause ]
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>> okay, i think all of you know dr. kim, who has changed the world in so many ways. but let's just take a look. a physician, an anthropologist, president of the world bank since 2012. president of dartmouth college. world health organization head for hiv and aids efforts. co-founder of partners in health, 1987. one, it's an honor to have you with us tonight. >> my thanks so much for having me. by the way, the wyoming answer. i think part of it is the absence of tertiary health care centers relatively speaking, right? massachusetts would never win it as a result. >> this is strategy. next time, you want to sit at the same table with dr. kim. three global crisis that you
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spoke about. conflict, endemics, impasse on people being forcibly displaced. countries and nearly every region turning inward. international and home-grown terrorism. as you thought about what you wanted to seek at the meetings, why did you pick these three crises to start with? >> well, you know, one of the things that i have noticed everywhere that i go is that, and this is a good thing. aspirations everywhere are going up. we have actually done a study that shows that when communities get access to broadband and they get smartphones, and they start being able to see on their smartphones how everybody else is living in the world, their reference income, income to which they compare their own, actually goes up. so there's no question that aspirations do rise when you get
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access to broadband, and access to broadband is something that's just going to happen. if you listen to jeff skoal, he thinks that within two or three years, all of africa could have broadband through a system of low-flying satellites. so this is happening everywhere. and you know, i was born in 1959 in korea, when it was one of the poorest countries in the world, and you know, it had a lower gdp per capita than ghana or kenya. my pirnts were among the few who had gone overseas, so they had high aspirations, bumost of the rest of korea didn't have such high aspirations. coming from that background, i think it's great that everybody has high aspirations. the problem is if you have high aspirations and it's linked to opportunity, then you get the kind of dynamic growth that you can have in korea. but if it's linked to frustration, you get -- and the thing i worry most about is so many countries, as aspirations grow and opportunities are
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not -- are not there, it can turn countries into places where fragilit fragility, conflict, violence, eventually extremism and migration, are going to be a final common pathway. it worries me every single day. so the question isn't how do you create the situations that there is truly equality of opportunity? you know, we kind of now have all decided that the grand project, the project that i studied as a graduate student, that we all thought still had promise in the '70s and '80s, this notion of creating equality of outcome, we kind of now have all agreed that that project failed. no clearer -- you couldn't hear the message any more clearly than when davos this past january when president xi jinping said i'm the head of the largest communist party in the world, he said that at one part of the speech, and he said the global system is the ocean we all swim in, and any effort to
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turn it back to lakes and creeks will fail. we need freer trade, freer flow of capital, and so when you get that kind of endorsement of the system as it exists today, the question for us is, okay, so we have given up on equality of opportunity, but now we've got to be even more committed -- the equality of outcome. we now have to be fully committed to equality of opportunity. and what's that going to take? so obviously, as you and i have discussed over the years, i went from being a math physics major to finance because of the riot and this concept of an american dream, not just for america but for the world, for a chance to succeed based on your ability. so you told them at these events, the first pillar of our strategy to end poverty and boost shared prosperity is to accelerate inclusive, sustainable economic growth. >> yeah. >> tell us what you meant by that.
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>> well, you know, probably still to this day, one of the greatest achievements in history in terms of this notion of equality of opportunity was the listing of 800 million people out of extreme poverty in china. if you ask them, how did you do that, they won't say we embraced capitalism. what they'll say is we adjusted the incentives to make the economy more dynamic. and really, what it meant was that they embraced the market. and i think there's never been anything like that before. so how do you create that kind of opportunity for everyone in the world? and so it's the classic thing we have always worked on by boosting economic growth, but what we have realized, especially when you understand that so many countries are pre-fragile if they don't spread the benefits of economic growth more broadly is that we began asking ourselves the question, how do you grow an economy in a way that's more inclusive, but that also takes into account things like the rising
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temperatures in climate change. how do you do those things at the same time? and so we started looking around and realized there's this huge opportunity. and we talked about it in los angeles. this huge opportunity where right now, there's more than $10 trillion sitting in negative interest rate bonds. in other words, you give your money to the european central bank and you pay them to keep it for you. same thing with the japanese central bank, same thing with the german central bank. $10 trillion in negative interest rate. $24 trillion in very low yielding, less than 1%, interest low yielding government bonds, and another $5 million literally sitting in people's safes at home. mostly 1,000-year-old bills sitting in people's safes at home. they want high returns, and we thought, not that we thought, but we are actively now working at creating situations where they can earn a higher return on their capital and at the same time, have a huge impact on inclusive, sustainable growth in
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developing countries. we're setting up those deals all over the world right now, and at your global conference, mike, we made the call. i just can't tell you how many deals are in the works now from that meeting. so many people -- >> i just want to make sure we get a chance at some of those. >> absolutely. so many deals are going, because you know, there's dormant capital everywhere, and most people didn't understand that working with governments and working with the private sector and developing countries, we're creating situations where we lessen the risk enough so that people who would never normally invest in a road or in energy or in telecommunications in africa are now seriously thinking about it because we've got enough tools to derisk those investments. that's our role. we have to use the tools of the rich to move this capital to create more opportunities for the poorest people. >> so let's go back. [ applause ]
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your wisdom is infectious. let's go back more than 50 years. i'm at berkeley and i scribble down this formula that prosperity, world, job, opportunity. et cetera. that you need access to financial capital to serve as the multiplier effect on the world's largest assets, human capital, the productivity of the people, and i want to get into your human capital initiative. social capital, which has many, many different issues, rule of law, property rights, and real assets that most people talk about. but when i think about your work today, human capital, how do we increase human capital? improve the quality of life and the length of life. most of the people in this room are focused.
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your career has focused on that area. education, et cetera. i want to transition to one of your quotes. for most of my adult life, i worked to provide care to people suffering from terrible diseases. in some of the poorest parts of the world, and for most of my adult life, my colleagues and i have been advocating more investment in people. ie, human capital. take us to today. >> so you know, when we started out, and you were prescient when putting that formula together. one of the things, though, that was difficult for us to do is to really calculate human capital. i mean, our chief economist has come close to winning a nobel prize sort of every year because he came up with a notion of the endogenous theory of growth, meaning it happens not because
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of external factors but because of internal factors. but we actually didn't know much about the contribution of human capital to overall wealth. so we're now doing, and this is the graph, we're doing a new volume that's going to come out in a couple months called "the changing wealth of nations." and for the first time, can you believe it, for the first time in the history of the world bank group, and we're the ones who do these calculations, we're including human capital in assessing welt. it turns out that about 65% of all wealth in the world is human capital. and you know, it wasn't too long ago that the only kind of capital we looked at was produced capital, roads, energy, you know, infrastructure that was built. but then probably ten years ago, we started including natural capital, which we have to take into consideration, natural sources, water, air, et cetera. but now that we look at human capital, it's 65%. when you look at the next slide, it turns out that the percentage
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of overall capital that per capita, high-income countries have huge amounts of capital, and most of it is human. if you look at and low and middle income countries, there's so much catching up to do to get anywhere near the welt per capita, especially human wealth per capita that there is in the wealthy countries. we asked a pretty straightforward question, i thought. the question was, have things changed enough so that we have more outcome data, functional health outcome data, and educational outcome data, not input, because before, the way we would measure in kweping countries is what percentage of urbudget do you spend on health or education? and really, that doesn't tell us much. so now that we have so much more outcome data and another very interesting change is that the countries are just much more -- much more transparent about sharing their data. and i have to just take my hat
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off to bob zellic, my predecessor. he was the greatest champion in the history of the bank on open data. i think that has led to now an openness that's just stunning. so here's what we did. we took the best data that we have on health outcomes, on educational outcomes, and years of schooling. so years of schooling is usually not such a great measure because effective years of schooling is what you really want. but if you took those three things together and then looked back 25 years, right? looked back 25 years and asked the question, so if you look at the top 25% of countries that have improved their human capital and compare them to the bottom 25% of countries that have not improved their human capital, what's the difference in economic growth? and the number we found was stunning to us. 1.25% of gdp per year for 25 years. and so when our chief economist saw this, he said, you know, is this what explains the
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middle-income trap? is this what explains the natural resource curve? all these things we have been observing over the years that even as gdp grows, that the inclusiveness of it doesn't get better. schooling outcomes don't get better. so when you see this kind of relationship, you then can ask a whole new set of questions, which is so if the investment in human beings and their health and education is so powerful, why is it that in most developing countries, heads of states and ministers of finance leave it to the end? and it's not to blame them, because at the world bank, we used to say first get rich and then later invest in your people. and people like a good good friend of ours, victor's and mine for many years, nobel prize winning economist, has been saying, but we know that the countries that have invested in their people and their health and their education before institutions like the world bank
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thought they could afford to, they're the ones who have done the best. and east asia was a great example. so the really interesting thing is now it looks like because of better methods, i mean, this is taking outcome data and using methods that the googles and alibabas use to look at relationships between data, taking huge amounts of data and looking for relationships. we're finding a connection to economic growth that's just profound. now, just showing that there's a connection between investing in people and economic growth is not enough. because there's got to be some way where it becomes irresistible to invest more in your own people. and so we're going to do a ranking. we're going to rank the countries from one down to 190. it's going to be incredibly, incredibly controversial because any time you do a ranking from the world bank, what happens is that the countries that are very high in the ranking, they love your rankings. the countries that are low in
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your ranking critique your methodology. we know this is going to happen. but it feels like it's my moral responsibility to show this connection between your investments in people and growth. so what's going to happen as a result? i think it could potentially effect foreign investment in those countries. i recently had a conversation with a ratings agency, and i said if we can convince you that this relationship is powerful enough, would that actually affect the way you rate their bonds? and they said of course it will. it has to. so the one thing i know will get heads of state and ministers of finance to invest more in health and education is if foreign direct investment drops and their bond spreads go up and their cost of capital goes up. that effects even the richest people. if they turn around and say how can you do this to us and not give us any options to improve
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investment? and what i would say is well, you have a lot of options. first, if you remove your very regressive fossil fuel subsidies, you can reduce your carbon footprint and at the same time have lots of money left over to invest in health and education. egypt has done, very courageously, they have done that recently. and another thing you can do is put -- you can apply a tobacco tax. another intervention that's very progressive. in other words, the ones who slow down their smoking the most are the poorest people, so their health gets better, and the vast majority of the benefits of tobacco tax can be structured so they go to the poor. and there are other things, too, like actually collecting taxes. we have been -- we have been fighting for years to help countries collect more taxes. especially from the rich. and so many countries, the only people who pay taxes are the poor. because they're the ones who are too weak to refuse to pay their
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taxes. so if your foreign direct investment drops and your bond spreads go up, then everyone has a motivation. but if it were just input, it would be too easy. that's why this -- these new rankings will be so powerful. it's not input. it's actually outcomes. they have to come to us. [ applause ] and what will we say inwe'll say actually, you know, don't take your lessons from the united states that spends so much on curative care. invest in prevention and do it with community health workers. [ applause ] but it's incentive. it's all about incentive. i was racking my brain for the last five years thinking what could we do that would fundamentally shift the incentives to the people who actually make the decisions in these developing countries. there's not a single head of a developing country that can't wax poetic about health and
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education. they just don't put any money into it. so many african countries that have terrible health outcomes spend less than 1% of gdp on health. >> so let's take a look at jim kim, dr. kim over time. so let's look at this quote here, jim. over the past year, we have done several different analysis, and we're finding investments in human beings, especially in health, education, social protection, are far more powerful, powerfully correlated with economic growth. and so gary becker, some of you, was very close to the institute, was with us, unfortunately passed away in 2014, he won a nobel prize for this concept of human capital. he estimated when we did work in the late 1980s, that it was 75%.
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and what did he say? it's a different type of capital. it's not a road, not a bridge. a different type. and one of the key elements and the central core to our conference here is that if we can accelerate prevention and wellness, one, we can substantially reduce health care costs. but we can greatly add to the growth of human capital from that standpoint. and so we step back and just think about it. is it the chicken or the egg? what is going to drive economic growth? is it an investment in natural resources? not really, because it doesn't create that many jobs. is it investment in the people? when you think about the 21st century, it is competition for talent. and capital, as dr. kim has pointed out, will flow to that area. so we have discussed the fact that economic growth is tied to
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the education of your population, and this focus on human capital from the world bank is going to change the world in so many ways, and when we think about it, and the multiplier effect of access to financial capital that you spoke about, let's look at dr. kim at our global conference this year. >> i was with a group that we work with, a faith-based organization, and i was telling them about how important finance is, about how important it is to crowd in capital, about how the tremendous potential of creative finance to solve the problem of poverty in the world. and you know, some of the faith-based organizations just pushed back and say when you talk about slops and hedges, we go to sleep. and here's what i said, because the archbishop representing the vatican to the u.n. and the
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world bank was there, and i said, you know, archbishop, with great respect, and you know, i admire the pope so much, but i would say this. i would say that for me, my first 25 years of working in development, i didn't know anything about finance. and the last five, i have been steeped in it. and i said, please tell the pope this. i think that my ignorance of finance in the first 25 years was actually sinful. because there's no way that we're going to be able to lift everyone out of extreme poverty unless we get much more creative about how we use the capital in the world to create good outcomes. [ applause ] >> so the most educated country in the world produced dr. kim. korea. no natural resources, pretty tough neighborhood for all those years. when we step back and say, okay,
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how does the middle class allocate its funds? if we look at the 11 asian countries that have risen up, starting with korea, you'll see that number two expenditure by the middle class in 11 asian countries is the education of their children. and this is supplemental education. so the average middle-class family in korea today spends $8,000 per child on supplemental education, with that enormous investment today, and in many areas today, korea leads the world. i want to, dr. kim, see if we could just jump over to social capital for a moment and talk about examples of social capital. and how the world bank is looking at these issues, and whether it's universal sufferage, whether it's the rule of law, education, health care we have spoken about, and these
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different issues of social capital. you have spoken about human capital. mainly driven heavily by education, improving the length and quality of life, the food chain, et cetera. how do you think about social capital? because in many ways, you are the judge of this issue in the world today. >> well, you know, we're in a very specific place because the founders of the institution actually built it into the articles of agreement in the world bank group that we cannot get involved in the internal political affairs of countries. so we walk a fine line. and every time we have data, we present it. so this is why i feel free to present the human capital data. there's a tremendous amount of data showing that rule of law is critically important. and the way that we have been approaching the social capital issues is that, you know, rather
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than saying your voting system should look like this, we can say, look, these are the things, many of them on the list that you showed, that are directly connected with faster, more inclusive economic growth. we can have opinions along those lines, but it's very difficult for us to navigate the sort of being nonpolitical piece of it. but can i just show you one slide? >> sure. >> this is what going to be, i think, very interesting. we're not going to pub lg this, but the university of washington that we do this with, if you can show the slide about the u.s. situation. we have actually begun to look at differences in human capital, and economic growth in the united states. and this is just on the basis of states. so if you look at this slide, and this is literally a graph that was made for me by chris murray, my colleague and old friend, i think the greatest medical economist in the world today. he just made this slide for me
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today. and it showed just what you would expect, that there's a linear relationship between improvements in human capital and economic growth. state by state in the united states. and we're going to -- he's going to take this and go to the county level. so what i hope to do is whether it's social capital or human capital, there has to be a different sense of how important it is to make those investments. i don't know if this will work. but i have some inkling that it could work because even though all i have done is give a speech saying that we're going to do these calculations of human capital, in a year we're going to consult with everybody, but in a year, we're going to publish a ranking. i'm already getting governments coming to me and saying, well, you better not do that. because it will really cause the opposition parties to get
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mischievous. so as long as we've got the data, and as long as we can make the case, i think that there's -- we have no choice but to do it. and then we have to be ready with all of the different both financial tools but evidence-based interventions like focusing on public health interventions, focusing on community health workers like you just showed. in fact, we're making the case in rwanda, we're going to do a major experiment on this. we think that as automation gets rid of a lot of jobs, many of the jobs that will be left will be in what tom friedman called the sympathy professions. empathy linked to science, technology, engineering, and math. so we're going to formalize the community health volunteers, 45,000 of them, we're going to formalize them as an actual workforce, pay them about as much as beginning teachers, and then that's going to be their first step into the formal labor market, and that could be where
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jobs grow going forward. and i have a lot of faith in doing that because before, we would think, that's just, you know, it's expenditures, and we would get all caught up in balance of payments and inflation. and not think about, wait a we would think oh, that's just -- we would get all caught up in balance of payments and inflation. wait a minute, this is better than building a road. this would be the one investment that you would make that would put you on the path to economic growth more than anything else. so we've got a plan. put the rankings out there. help people raise funds by finally collecting taxes, getting rid of fossil fuel i subsidies, progressive interventions like a tobacco tax. because you have got to focus on outcomes, focus on public health, focus on community health workers. and then watch. as you do the right thing by your people you are also going to do the right thing for your
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economy. [ applause ] now, to be fair, i could lose my job over this. [ laughter ] . but you know what, it's worth it. it's worth it. i will do this no matter what. >> so in closing top of the, i just want to go back to a slide that you see many times when you join us. and that is that more than 50% of all the economic growth in the world in the last 200 years can be traced to public health and medical research. and you have heard today from dr. kim really the basis here. and when we think about the chicken or the egg and the technology world of the 21st century, educating your citizens, making them productive in the world we live in, improving their health, improving prevention, and improving the length and quality of life is the driver of
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education. and as dr. kim has pointed out will drive investments in those parts of the world. so thank you for joining us. and thanking you -- [ applause ] can i just -- >> i will you are all here i want to point out my good friend francis collins headquarters of the national world ints institutes for health put out a document on the return on investment in the nih. it's stunning. it's really important that investments in research have been among the best investments that have ever been made. francis, grags on continuing your work. we have got to make sure that it happens. [ applause ] >> that was a perfect lead in to tomorrow because early in the morning, francis will join us on a session with bob lugen from celljene and golden from gw
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school of health. thank you for joining us. and thank you dr. kim. here's what's ahead today on c-span3. coming up next, a hearing on proposed drilling in the arctic. then a discussion on health care costs. after that, another hearing, this one on women in business. and a little bit later, remarks from fbi director chris wray. join us tonight for american history tv in primetime. we'll look at a discussion on the 70th anniversary of the 1947 hollywood black list hearings. american history tv primetime begins at 8:00 p.m. eastern here on c-span3. the senate finance committee spent most of last week going through the republican tax reform bill. today we'll show you key
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exchanges including one between brown and hatch: watch that today at 1:30 p.m. eastern on c-span2. coming up tonight at 8 eastern we will kick off our road to the white house kanch with 2020 democratic candidate jim delany. here's a preview. >> donald trump became the president this amazing country because of two things. one, democrats didn't turn out. and two, for some reason, we stopped talking to people about what they care about. i think the first part is going to take care of itself. the energy that you are showing, the enthusiasm that this party is showing is extraordinary. but we have -- -- issues we care about. and i believe in the fullness of
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time we'll be proven right on just about every one them. but that doesn't mean it moves people's hearts and minds. what moves people's hearts and mind is their job, their pay, and the opportunity for their kids. and every time we are not talking about that, and every time we are talking about how bad the republicans are, it's a missed opportunity for us. that's how we take this country back, in my opinion. >> and is just a short portion of our road to the white house 2020 coverage from the kennedy/clinton dinner featuring maryland democrat john delany. watch the entire event beginning at 8:00 eastern on the on our companion network, c-span. now the senate energy and natural resources committee looks at allowing a portion of alaska's arctic national wildlife reserve to be opened to oil and natural gas drilling. following the committee, murkowski, the chair, spoke briefly wit


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